March 13 (Bloomberg) -- Domaines Barons de Rothschild
Lafite began construction of a winery with a local partner in
China, its first in Asia, as appetite for premium wine increases
in the world’s second-largest economy.

The 1.73 hectare (4.3 acre) winery in Penglai in eastern
China’s Shandong province, one of China’s largest wine-producing
areas, will be Rothschild’s third Lafite production base after
Argentina and Chile, according to a government statement. The
first phase will cost 100 million yuan ($15.8 million), it said.

China is the fifth-biggest wine market by volume and will
help accelerate global wine consumption in the next five years
as wealthy Chinese increase purchases of high-end vintages such
as Chateau Lafite Rothschild, according to research commissioned
by industry exhibitor Vinexpo from International Wine and Spirit
Research. Appetite by affluent Chinese for luxury goods has
surged as a result of decades of growth in the world’s most
populous nation.

“The world’s top luxury brands are all very interested in
the Chinese market, Rothschild is no exception,” said Zhang Lu,
a Shanghai-based analyst at Capital Securities Corp. “The
winery underscores its confidence in demand for high-end wine in
China.”

Chateau Lafite Rothschild teamed up with CITIC East China
(Group) Co. to build the production base which will include a
vineyard, winery and related facilities, according to the
government statement. It didn’t give a date for completion of
the project.

Wine production in Penglai, a coastal city located in
Bohai-Rim in eastern China, has doubled to 140,000 tons in 2011
from 2005 and the number of wine makers increased to 70 from 39
in the same period, according to the statement.

Value Outpaces Volume

The value of wine purchases may outpace volume in the next
four years, helped by high-end consumption in China, Robert
Beynat, the chief executive of Vinexpo, said in a January
interview. Chinese, including people in Hong Kong, will increase
the amount of wine they drink by 54 percent by 2015 as
consumption reaches 1.9 to 2 liters per person, the Vinexpo
study shows. The U.S. is the largest wine market by volume,
followed by Italy and France.

China imported $1.27 billion worth of wine in the first 11
months of 2011, an increase of 88 percent from a year earlier,
Xinhua News Agency reported, citing customs data.

A case of Lafite-Rothschild 1982 fetched a record HK$1.03
million ($132,770) at a Sotheby’s auction in Hong Kong in
October last year, while another case of the same vintage sold
for HK$720,000 at a Christie’s sale in the same city the
following month.